Welcome! I'm Simon Owens and this is my media newsletter. You can subscribe by clicking on this handy little button:
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The valley of churn
Spend any amount of time reading coverage of the media industry and you’ll be constantly exposed to success stories. Everywhere you turn there’s a media executive touting their X% YOY audience growth or a newsletter writer being interviewed about how they hit 10,000 paying subscribers or a TikTok star casually mentioning they charge $20,000 per sponsored video. And because nobody wants to be regarded as a failure, everyone else projects strength — to the extent that probably each person reading this has found themselves, at some point, cherry picking stats that indicate upward growth. This then triggers a self-perpetuating state of anxiety among media operators who aren’t aware that they’re not the only ones struggling to grow their businesses.
Of course, with traditional media outlets, there often comes a breaking point — typically indicated with a massive round of layoffs — where the emperor is revealed to have no clothes. How many years did we buy BuzzFeed’s narrative that it had unlocked the strategy for unlimited growth before everything came crashing down? And more recently, Business Insider rode wave after wave of positive press about its subscription growth and expansion into new verticals, only to then suffer a series of setbacks that painted a much bleaker picture. Last week, its editor-in-chief finally admitted in a staff-wide memo that “traffic is down. Subs are down. Video views are down. That was true two weeks ago and has been for months.”
But for those content creators who are operating their own solo media businesses, that public breaking point often never comes. They've reached some level of "success," in that they're making more than pizza money, but clearing that next hurdle to where they're pulling down something resembling a living wage is seeming increasingly unreachable. Many are left wondering if they’re progressing, treading water, or just slowly drowning. It can be an intensely lonely experience, especially when everyone around you seems to be doing just swell.
That’s why I found it so refreshing to read this piece in the Hoarse Whisperings newsletter titled “I am presently failing.”
I’m not super familiar with HW — as I’ll refer to him from here forward — but I do know that he’s built a sizable following on Twitter, and at some point he launched a paid newsletter on Substack. Though he experienced encouraging subscription growth early on, that growth eventually plateaued and even reversed itself. And while HW points to a number of causes — including Elon Musk’s decision to punish Substack links on Twitter — the underlying problem is the one that every subscription business faces eventually:
The vexatious mortal enemy of any subscription-based business is ‘churn’. People leaving. It doesn’t matter whether it’s a magazine, a gym, cell service, or Jelly of the Month, the tide pulling against the business is people leaving.
When HBO was a client of mine, they needed to bring in a volume of new customers each year equal to a startling 15-20% of their entire customer base just to offset the people who churned out.
That’s just how it works in subscription-based businesses. People leave. You have to replace them with at least as many.
For better or worse, paid subscription models are the easiest to implement for the vast majority of content creators, and I think many would identify with HW’s struggles. After a certain point, building a subscription business starts feeling more and more like wading through molasses, to the point where you may stop growing all together.
It can be a quite maddening experience, especially since there’s no readily apparent remedy. It feels even worse when you keep coming across creators who humble brag about their eye-popping subscription numbers. The entire situation can leave you feeling wholly inadequate as a content creator.
I’ve been operating as a full-time creator for over three years, and there certainly have been times when I felt this inadequacy myself. But I’ve always managed to push through and find a path forward. Here are the strategies I’ve used to adapt:
Talk to other media operators
As I mentioned above, most media entrepreneurs aren’t keen on publicly broadcasting their failures, but I’ve found they’re much more willing to open up in a private conversation.
Over the last few years, I’ve assembled a growing network of media operators that I correspond with regularly through DMs, email, and even phone calls. Many of them have shared their own struggles across a range of issues, and it’s helped contextualize the problems I’m facing.
What’s more, these discussions have led to key insights into how to troubleshoot those problems. The network essentially served as a high-value focus group wherein a member’s own experience informed the feedback they gave. I’ve definitely had a few lightbulb ideas that were triggered through my conversations with others.
Reassess your subscription strategy
Too many media businesses set their subscription strategies on autopilot; they start with assumptions about what drives audience conversions from free to paid, and then stay wedded to those strategies moving forward. They assume that what worked to convert the initial cohort of paid subscribers will also work on the next cohort.
Let’s consider Netflix and Spotify for a moment. By some measures, they’re among the most successful subscription businesses of all time, with each company serving hundreds of millions of recurring customers.
In the past decade, has there been a single year when either of these companies didn’t push forward a major shift in their strategy — whether it was through their content offerings, optimization, or marketing? Of course not! That’s because subscriptions aren’t a single puzzle to be solved, but rather they’re an ever-shifting landscape of consumer trends and motivations. Over time, marketing channels get saturated and successful conversion levers become less effective.
I’m constantly testing out new subscriber offerings and ways to market them. Several weeks ago, for instance, I got the idea to introduce a formal process so new subscribers could book a half-hour introductory phone call with me. This unlocked a sizable burst of conversions from readers who had been on the fence about subscribing. Recently, I began working on another subscriber feature that I plan to debut in the coming weeks.
Recognize that subscriptions alone probably will never be enough
Many media businesses are built on the foundation of Kevin Kelly's “1,000 true fans” theory — which posits that content creators only need to find 1,000 people to pay $100 a year in order to generate a decent middle class income.
To be clear, I think Kevin Kelly’s essay deserves all the recognition it’s received for pinpointing a fundamental truth about internet economics, but at the same time I’ve come to believe that the vast majority of creators won’t be able to achieve the escape velocity needed to generate 1,000 “true fans.”
Subscription economics are brutal and require frequent output of both free and paid content to pull consumers into a sales funnel and convert them. Unfortunately, most creators simply don’t have the capacity to maintain the level of production needed to reach 1,000 concurrent customers. Eventually, the gravitational force of churn becomes too great to overcome.
That’s why I’m such a huge advocate of revenue diversification. Whether you’re selling high-priced courses, low-priced ebooks, or sponsorships, each approach allows you to monetize sections of your audience who may otherwise resist paying for a subscription. According to most surveys, only about 20% of adults pay for even a single news subscription, which means a huge portion of your audience is likely unmonetizable through subscriptions alone.
Don’t get me wrong; I still think paid subscriptions can form a great foundation for any media business, especially since they incentivize creators to remain hyper focused on serving their audiences. But there’s a reason that even the most successful subscription companies — including Netflix, Spotify, and The New York Times — have embraced diversification: there aren’t quite enough subscribers to go around.
The valley of churn is harsh and inhospitable. Often, the only means of escape is to explore other business models.
What do you think?
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Quick hits
"A new study from Pew Research Center, released on Thursday, found that just over half (51%) of the top-ranked podcasts in the US have a video component." [Business Insider]
I'm pretty much ready to declare that 99% of the hype around journalism use cases of AI is bullshit. It's not that the longterm potential isn't there, but every article I read on the subject involves media executives issuing vague bromides like "we're exploring all potential applications." It's getting tiresome.
Wordpress is launching a paid newsletter product. [TechCrunch] This is actually a really interesting move from Wordpress because it's offering options for both its free and paid accounts. For free accounts, the user simply pays 10% of their subscription revenue, whereas if they upgrade to a paid Wordpress account they pay 0%. Probably the biggest weakness of Substack is that, once a newsletter reaches a certain size, it's incentivized to move off the platform to avoid the 10% fee. With Wordpress, users will simply be able to upgrade and then eliminate the fee — thus Wordpress doesn't lose them as a customer.
People are often more willing to pay for in-person connections than they are for content. That's why conferences and other in-person events are such a huge business. [Meagan’s Newsletter]
I'm surprised it's taken this long for WashPo to build out its games vertical, given the success of its chief competitor in this niche. [WashPo]
Are you sick of me yet?
If not, then you might want to follow me on one of these channels where I round up media industry news on a daily basis:
I don't like this post. But thanks for the dose of reality, as bubble-bursting it may be for this aspiring new content creator. It's probably better than living in fantasy. And I appreciate the solutions, especially genuine communication with other creators, and being creative about my product's value.
Just discovered your Substack. Great material. Three touchpoints.
1. Two decades ago I was a paid columnist for a local newspaper. I had become friends with the president and publisher in the late 90s. As a leadership guy, he had me come an speak to his leadership team. I talked about the importance of making the newspaper the go-to-place for information about the community. The idea fell on deaf ears. A decade later, Facebook was mastering this approach to community information gathering and distribution.
2. My first writing gig as a columnist began in 1999. It last a year or so. Then in 2004, I was paid to write 700 words twice a month on business leadership. At the same time, I began a weblog. Five years later, my weblog was ranked in the top 50 leadership weblogs in the world. That ranking did not translate to more clients. In 2018, I published my first book, having started a new weblog six months before. The launch was a failure. In my analysis, I determined that we did all the right things, but none of it produced an audience anticipating the publication of the book. So, I spent a year traveling the country doing book events. I learned a lot, but it still did not produce an audience. At that point, I still had my WordPress weblog and MailChimp newsletter, with about 350 subscribers. None of that translated into booksales. During the first 15 months of the pandemic, I wrote 7 short books and self-published them on Amazon. I used them as reference points to talk about topics that I thought needing to be discussed. Still, no appreciable increase in audience or sales. There are other reasons as to why, but they really don't matter when your focus actually suggests a more narrow market. In January of last year, I began to write on Substack - edbrenegar.substack.com. I transfered my MailChimp mailing list and ended that relationship. I stopped posting on WordPress which is embedded on my website. I decided to write what I wanted to write in the manner that I wanted to write all along. So, I'm writing on leadership and culture long, deeply philosophical, yet practical essays. The low in subscribers came in April and May last year as my numbers dropped to 336. Then in the summer, my numbers began to grow to the point that I realized that it was time to create the podcast that I had had in the back of my mind for about 5 years. So, in February, I started The Eddy Network Podcast - https://tinyurl.com/42xx39ph. I post twice a week on Mondays and Thursdays. My subscribers peaked yesterday at 711. My paid subscribers are few because I don't want a divided audience.
3. What explains the kind of growth that I have had over the past year, where nothing in the previous forty years of my work ever looked like this? Simple. First, I'm not a commodity. I'm engaging with people at their Substacks and on LinkedIn. By treating the comment sections as sort of "third places" for positive, constructive conversation, people get a taste for how your think and interact. Because local newspapers are really advertising driven enterprises, there doesn't seem to be a place for actual conversation there. My podcast is organized as a networking demonstration platform. "I ask people that I know to come on the show. I also ask people that I want to meet and get to know to be a guest. I ask my guests, 'Who do you know that you think I should know because they, too, would be a good person to interview. And would you introduce us?' " You were recommended to me. I believe the future will be partially determined by how well we are able to talk to one another in respectful conversations of openness and curiosity. And how we develop our networks to facilitate these conversations. I'm glad to have been pointed toward your Substack by one of your subscribers. I'd like to invite you to come on my podcast. Let's connect soon. Thank you.